Agreement to Sell Attracts Stamp Duty If Possession Is Granted: Supreme Court

About the Judgment

The Supreme Court of India has reaffirmed that an agreement to sell property attracts stamp duty as a ‘conveyance’ if possession is granted to the buyer, even if the sale deed is yet to be executed. The ruling, in the case of Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr., highlights that possession granted under an agreement to sell amounts to the transfer of possessory rights under Section 53A of the Transfer of Property Act, 1882, thereby making the agreement liable for stamp duty under the Bombay Stamp Act, 1958.

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Key Legal Findings

• The Court observed that the agreement to sell in question included a clause explicitly stating that physical possession of the property had already been handed over to the appellant.
• Citing Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, the Court noted that such agreements, where possession is transferred, qualify as a ‘conveyance’ for the purpose of levying stamp duty.
• The ruling clarifies that it does not matter when possession is given—before, during, or after the agreement—so long as it is transferred under the agreement to sell, stamp duty is applicable.
• The Supreme Court supported its findings with references to previous judgments, including:
  • Veena Hasmukh Jain v. State of Maharashtra (1999) 5 SCC 725
  • Shyamsundar Radheshyam Agrawal v. Pushpabai Nilkanth Patil

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Case Details

Case Title	Court	Key Issue	Judgment Date
Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.	Supreme Court of India	Stamp duty on agreements to sell with possession	[Date TBD]

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Impact and Implications

• This judgment serves as a reminder for buyers and sellers to ensure that proper stamp duty is paid when possession is transferred under an agreement to sell.
• It reinforces the principle that possession rights protected under Section 53A of the Transfer of Property Act are significant enough to attract full stamp duty.
• Buyers must take caution when drafting agreements to sell, as any clause indicating possession transfer can result in additional legal and financial implications.

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